Almost $35mn is being poured into the National Supplier Development Programme (NSDP), a project initiated by the Foreign Trade Ministry to pull Egypt’s industry out of its old protectionist cocoon.
“Over the past few years, industry sought to protect itself and sought to operate in an environment with low competitiveness and could not compete worldwide,” Foreign Trade Minister Rashid Muhammad Rashid said.
“I am convinced there is a dire need to modernise the industrial sector,” Rashid said on Wednesday, while speaking at the launching of the programme in Cairo.
“The attitude is changing, this is what counts. We are creating momentum and enthusiasm,” said Hilmy Abu al-Aish, chairman of the Industrial Modernisation Centre (IMC) that is implementing the plan along with the ministry.
“I am convinced there is a dire need to modernise the industrial sector”
Rashid Muhammad Rashid, Egypt’s foreign trade minister
Under the scheme, hundreds of small and medium-sized enterprises supplying large “mother companies” will be able to embark on a $173,000 upgrade.
Of that money, 85% is provided by the IMC, which is financed up to two-thirds by the European Union (EU). The remaining 15% can be borrowed at a preferential interest rate.
Mother companies benefit from a more efficient supply chain while suppliers reach a level that puts them on the global sourcing map, a win-win formula the ministry says guarantees the modernisation effort’s sustainability.
So far, 37 large industrial companies have signed up, including Egyptian and regional groups, as well as multinationals such as US behemoths General Motors (GM) and Procter and Gamble.
The scheme includes European giants Mercedes, Unilever, Nestle, Siemens and Cadbury Schweppes.
The project started from July, when GM Egypt complained to Rashid about the quality of the local feeder industry that supplied its assembly chain.
Rashid promptly signed a memorandum of understanding under which the government committed to upgrading GM’s suppliers in exchange for which they would be placed on the motoring giant’s global network of suppliers.
GM Egypt chairman and managing director Don Butler, whose company will not incur any cost for the upgrading, praised Rashid’s no-nonsense approach to reforming the economy.
So far 37 multinationals have
“I think this open and transparent attitude is a microcosm of what is happening in the country at large,” Butler said.
Rashid, a successful business executive who had to resign from 27 company boards in 24 hours when he was appointed last year, has set Egypt’s long depressed economic indicators in motion since taking over, and has also drawn praise for his work ethic.
According to Abu al-Aish, these companies employ 50,000 people. He said the target was for the NSDP to generate a growth of $2.6 bn and 25,000 jobs over the next five years.
With obstacles such as endemic red tape and an inadequate banking system, the industrial modernisation programme will still not be sufficient to meet President Hosni Mubarak’s pledge to create 4000 new factories over the next six years.
But Muhammad Fathi, a former Unilever executive whom Rashid brought to the government and who masterminded the programme, said the project would play an “important part” in achieving these goals.